by Susan Olson (BioCycle Magazine) Because of an all-time high waiver credit value paired with strong advanced RIN prices, renewable natural gas could fetch $35/MMBtu in 2017. Since 2009, the U.S. Environmental Protection Agency has mandated the blending of renewable fuels into the motor vehicle transportation supply under the Renewable Fuel Standard (RFS). Renewable natural gas to compressed natural gas (CNG) or liquefied natural gas (LNG) is playing a growing role in satisfying the fuels mandate. This article explores how renewable natural gas (RNG) works within the RFS from a demand and economic viewpoint.

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The currency of RFS compliance is the Renewable Identification Number (RIN), which is a credit generated for one ethanol equivalent gallon of renewable fuel. RINs are generated by renewable fuel producers and importers based on production, import or sale of renewable fuels. RINs travel with the physical fuel until it is blended into the transportation supply. A RIN may then be retired by its obligated party owner, or separated and sold as its own environmental credit commodity, ultimately being purchased by an obligated party who needs it to prove that it is meeting its mandate. For 2017, the mandate for total renewable fuel is 15 billion gallons more than the advanced mandate. The 15 billion gallons will be fulfilled mostly by ethanol. There is a daily RIN trade although some days are more active than others.

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In 2014, RFS rule amendments designated CNG and LNG from landfill gas and certain types of digesters as cellulosic biofuel that qualifies for D3 RIN generation. Since that time, the cellulosic mandate has been met mostly by RNG. … Landfills have been the primary RNG suppliers over other sources because of the sheer economy of scale in return on investment from RNG collection and clean-up equipment.

Within the RFS structure, RNG can be displaced to CNG/LNG stations connected to the common carrier pipeline system. So RNG to transportation fuel under RFS is not just limited to landfills or digesters with CNG/LNG stations on-site. For displacement, the source must also be connected to a common carrier pipeline. RNG going onto the common carrier pipeline must be cleaned up to meet pipeline quality standards.

A series of regulatory registration, tracking and assurance mechanisms under RFS must be used to prove a one-to-one connection between the source and the sink.

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One anaerobic digestion facility that has gone through the process is Fair Oaks Farm in Fair Oaks, Indiana, which utilizes compressed RNG for its milk transport fleet.

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The value of the cellulosic RIN is benchmarked to the value of an advanced RIN and the value of what is called a cellulosic waiver credit. The waiver credit warrants some further explanation: READ MORE